Topic B · Private-Sector Research

Equity Compensation

Estimated read: 60-90 min across multiple sessions · v1 draft · 2026-04-22

1. What equity actually is (and isn't)

Equity comp is a claim on future value of the company, delivered to you gradually in exchange for your labor. It exists because:

• Early-stage companies can't afford full-market cash comp. Equity lets them hire above their cash budget.
• Aligning incentives: you win when shareholders win.
• Retention: vesting schedules tie you to the company for 4+ years.
• Tax arbitrage (sometimes): capital gains treatment can beat ordinary income if structured right.

It is not:

• Cash. Private-company equity is illiquid — you can't sell it at will.
• Free. Options have strike prices. Exercising them costs real money.
• Guaranteed. Most startups fail. Even successful ones can zero out common shareholders (see preferences).
• Worth its paper value. "$500k in options" at a Series B is a lottery ticket with decent odds — not a bank account.

2. Types of grants

There are four flavors you'll encounter. The type matters enormously for tax treatment.

Incentive Stock Options (ISOs)

• Who gets them: US employees only (not contractors, not advisors).
• What they are: the right to buy a fixed number of shares at a fixed strike price, at any time within the option's life (usually 10 years from grant).
• Key feature: favorable tax treatment if you meet holding requirements — no ordinary income at exercise (but see AMT below), long-term capital gains on the entire spread if you hold 2 years from grant and 1 year from exercise.
• Catch: AMT can create a tax bill at exercise even though no cash has been received. This is the "exercise and hold" trap that has bankrupted people in past cycles.
• $100k limit: only the first $100k of ISOs (measured at grant-date FMV) vesting in a calendar year can be ISOs. Excess automatically becomes NSOs.

Non-Qualified Stock Options (NSOs / NQSOs)

• Who gets them: anyone — employees, contractors, advisors, board members.
• What they are: same mechanical structure as ISOs (right to buy at strike), but:
• Tax treatment: ordinary income at exercise on the spread (FMV minus strike). Employer withholds taxes at exercise. No AMT quirk.
• Simpler but more expensive in most scenarios. You pay tax sooner and at higher rates.

Restricted Stock Units (RSUs)

• What they are: a promise to deliver actual shares at vesting. No strike price. No exercise decision.
• Where you see them: public companies (Google, Meta, Snowflake) and late-stage private companies approaching IPO.
• Tax treatment: ordinary income at vest (public) or at liquidity event like IPO (private — called "double-trigger" RSUs). Employer typically withholds by selling some of the vested shares.
• Simplicity: shares appear in your brokerage account, you can sell at market. No out-of-pocket cost, no strike price math.

Restricted Stock (RS) — early-stage

• Who gets them: founders and very early employees (first 10-20 typically).
• What they are: actual shares issued on day one, subject to vesting (company repurchases unvested shares if you leave).
• 83(b) election: the critical move. Elect within 30 days of grant to pay tax on the full value immediately (usually near zero at founding). Then all future appreciation is long-term capital gains.
• Not relevant for you unless you join at founding/pre-seed. Mentioned for context.

Phantom stock / SARs

Rare at tech companies. Mostly at private companies that don't want to issue real shares (family businesses, pre-IPO holdings). Treat as deferred cash comp indexed to equity value — not real equity. If you see this, ask questions; it's usually worse than actual equity.

3. Vesting

Vesting is the schedule by which equity you've been granted becomes yours. Before shares vest, you have no claim on them if you leave.

The standard: 4 years with 1-year cliff, monthly thereafter

• Cliff: no vesting for the first 12 months. At month 12, 25% of the grant vests in one event.
• After cliff: remaining 75% vests monthly or quarterly over the next 36 months.
• Total vest: 48 months from grant date.

Variations you might see:

• Back-loaded vest (10/20/30/40 or 5/15/40/40): company retention tool. Bad for you. Rare but creeping into some late-stage companies.
• 5-year vest: some companies (Snowflake famously, some others) use 5-year vesting. Bad for you, modestly.
• 6-year vest: rare. Serious red flag unless grant size is proportionally large.
• No cliff: rare but worth asking about for senior hires. You earn something if you leave in month 6.

Acceleration

Acceleration clauses determine what happens to unvested equity in a change-of-control (acquisition).

• No acceleration: your unvested shares transfer to the acquirer on their vesting schedule. You have to stay to earn them, or they go back to the pool.
• Single-trigger: all unvested shares vest immediately at acquisition. Rare, typically only for founders.
• Double-trigger: unvested shares accelerate only if both (a) acquisition happens AND (b) you're terminated without cause or resign for good reason within some window (usually 12 months). This is the standard for senior execs. Ask for it.

Refresh grants

Good companies issue additional equity grants starting year 2 or 3 to prevent comp from cliffing when your initial 4-year vest completes. At senior levels, refreshes typically equal 25-50% of the initial grant, granted annually.

Ask during the offer stage: "What's the refresh grant cadence and sizing here?" Answer reveals how the company thinks about long-term comp. Silence or vague answer is a yellow flag.

4. Strike price, FMV, and the 409A

For options (ISOs and NSOs), the strike price is what you pay per share when you exercise. It's set at the grant date and doesn't change.

The 409A valuation

IRS Section 409A requires private companies to strike options at fair market value (FMV) of common stock on the grant date. To establish defensible FMV, companies commission a third-party 409A valuation every 12 months (or after material events like a funding round). The strike price of grants issued between 409As equals the most recent 409A FMV.

Why strike doesn't equal the last round's price

When a company raises a Series B at a $400M post-money valuation, investors buy preferred stock, not common. Preferred stock has extra rights (liquidation preferences, board seats, anti-dilution) that make it more valuable per share. The 409A valuation discounts common to reflect this — typically 20-35% of the preferred price at early stages, rising toward 80-90% as the company approaches IPO.

How strike evolves over rounds

Round	Preferred price	409A (common)	Strike if granted then
Seed	$1.00	$0.10	$0.10
Series A	$3.50	$0.70	$0.70
Series B	$10.00	$3.00	$3.00
Series C	$25.00	$10.00	$10.00
Series D	$50.00	$25.00	$25.00
Pre-IPO	$80.00	$65.00	$65.00

Key takeaway: earlier grants have dramatically lower strikes. If the company IPOs at $40/share, the Seed grant has $39.90 of spread per share; the Pre-IPO grant has $0 or negative spread. This is why the "join earlier" equity math is so compelling — and why late-stage private companies often shift to RSUs (which don't have a strike problem).

5. Exercise mechanics and the 90-day trap

With options, vesting gives you the right to buy. You still have to actually exercise (buy) to own the shares. Exercising costs cash.

Cost at exercise

Total out-of-pocket at exercise = (shares × strike) + any taxes owed.

Example: 10,000 ISOs at $3 strike. FMV now $12.

• Cash to exercise: 10,000 × $3 = $30,000
• Spread: 10,000 × ($12 − $3) = $90,000 (phantom income for AMT purposes — see tax section)

The 90-day post-termination exercise window

This is where most employees get burned.

Under standard option agreements, when you leave the company, you have 90 days to exercise any vested options. After 90 days, your vested options expire. You lose them.

So if you:

1. Vest 10,000 options over 2 years at a Series B company
2. Leave for a new role
3. Don't have $30,000 cash to exercise (or don't want to pay AMT on the $90k spread)

...you walk away with nothing. This has happened to countless early employees at successful companies. They were technically millionaires on paper and lost it all because they couldn't or wouldn't write the check in the 90-day window.

Extended exercise windows

Progressive companies (Pinterest popularized this, many follow) offer 5-year or 10-year post-termination exercise windows. This removes the 90-day trap entirely — you can exercise later, when you have more information and more cash.

Ask during every offer: "What's the post-termination exercise window?" If it's 90 days, ask if they can extend. If they can't or won't, factor the exercise cost into your willingness to leave. It's a real constraint on your career mobility.

Early exercise

Some companies allow you to exercise options before they vest. Why would you?

• Start the capital-gains clock early: combined with an 83(b) election, all future appreciation becomes LTCG.
• Exercise while FMV = strike: zero spread = zero AMT hit.

Early exercise is a power move if you're joining very early (strike near zero) and have cash to burn. At Series B+ it's usually not meaningful.

6. Tax treatment

This is where equity comp diverges most from intuition. The same grant can cost you 20% or 50% in taxes depending on type, timing, and holding period.

ISOs — the AMT quirk

ISOs have the best tax treatment if you qualify. The qualification is:

• Hold at least 2 years from grant date, AND
• Hold at least 1 year from exercise date

If you qualify:

• No ordinary income at exercise (but AMT kicks in — see below)
• Entire gain (sale price − strike) is long-term capital gains (federal max ~23.8% including NIIT)

If you don't qualify (sell too early — "disqualifying disposition"):

• Spread at exercise becomes ordinary income
• Any additional gain after exercise becomes capital gains (ST or LT depending on hold)

The AMT trap (important)

When you exercise ISOs and hold, the spread (FMV − strike) is an AMT adjustment. AMT is the Alternative Minimum Tax — a parallel tax system designed to prevent high earners from using deductions to pay too little.

Example: exercise 10,000 ISOs at $3 strike, FMV now $15. Spread = $120,000. For regular tax, no event. For AMT, you added $120,000 to your income. You may owe ~$30,000 in AMT tax in the year of exercise — even though you haven't sold anything and have no cash from it.

This has destroyed people. The dot-com era is littered with engineers who exercised ISOs at high FMVs, got stuck with six-figure AMT bills, then watched the stock crater and had no way to pay the tax.

Defensive plays:

• Exercise early when spread is small or zero
• Exercise only what you can afford the AMT on
• Spread exercises across tax years
• Get a CPA who specializes in stock comp before exercising at a growth-stage company

NSOs — simpler, more expensive

• At exercise: spread (FMV − strike) is ordinary income. Employer withholds.
• After exercise: additional gain is capital gains (LT if held 1 year).
• No AMT weirdness.

NSOs have no favorable treatment — just straightforward ordinary income + capital gains. The advantage is simplicity and no AMT surprise.

RSUs — taxable at vest (public) or at liquidity (private)

Public-company RSUs: at vest, FMV of shares becomes ordinary income. Employer withholds (usually by selling ~22-37% of the vested shares). After vest, additional gain or loss is capital gains.

Private-company RSUs (double-trigger): no tax at vest. Tax occurs at the second trigger — usually IPO or acquisition. At that point, the full FMV becomes ordinary income, all at once. This can create massive tax bills in the IPO year.

QSBS — the best deal in the tax code

Qualified Small Business Stock (Section 1202) is a major tax benefit most people don't know about.

If you hold stock (not options — has to be actual shares) in a qualifying C-corp for at least 5 years, you may exclude up to the greater of $10 million or 10× your basis of federal capital gains tax from the sale.

Qualification requirements (simplified):

• Company is a US C-corp
• Gross assets ≤ $50M when shares were issued (originally issued to you, not bought on secondary)
• Active business (not holding company)
• Most tech/bio/healthcare qualifies; hospitality/professional services/finance generally doesn't

California and NY don't conform to QSBS federally, so if you relocate, the state tax hit changes. WA is favorable.

7. Liquidity paths

Private-company equity is worth nothing until it becomes liquid. The three paths:

IPO

• Company files S-1, goes public. Your shares become tradeable in your brokerage account.
• Lock-up period: typically 180 days post-IPO. You can't sell. Stock can swing wildly during lockup.
• Timing: historically 7-10 years from Series A to IPO. Lengthening in recent cycles (some companies stay private 12+ years).
• Outcome variance: stock can trade above IPO price for years (Snowflake) or below for years (most 2021 IPOs).

Acquisition

• Another company buys yours. Your shares convert to cash, acquirer stock, or a mix.
• Preference stack matters enormously here — see next section. Many acquisitions pay out to preferred investors only, leaving common shareholders with little or nothing.
• Can happen anytime — fastest path to liquidity, but usually smaller outcomes than IPO.

Secondary markets and tender offers

• Company-sponsored tender offer: company arranges for investors to buy some of your vested shares at a set price. Most common at $1B+ valuation. Usually limited to 10-25% of your holdings.
• Third-party secondary platforms (Forge, EquityZen, Hiive, Nasdaq Private Market): you can sometimes sell to qualified investors directly. Typically requires company approval; often forbidden by stockholder agreement.
• Pricing: secondary trades often happen at 20-40% discount to last preferred price (reflecting common-vs-preferred gap).

8. Liquidation preferences and the preference stack

This is the single most misunderstood part of startup equity, and it's where "the company sold for $200M and I got nothing" stories come from.

Preferred stock has preference

Investors don't buy common shares — they buy preferred shares. Preferred has rights common doesn't:

• Liquidation preference: at exit, preferred shareholders get their money back first, before common shareholders get anything.
• Participation: some preferred "participates" after getting its preference — gets paid twice.
• Dividend rights, anti-dilution, board seats, protective provisions — other preferences.

1x non-participating preferred — the standard

The most common structure: preferred investors get 1× their investment back at exit, OR they convert to common and take their pro-rata share — whichever is more.

Example: Series B investor puts in $50M at $400M post-money (12.5% of company).

• Exit at $300M → preferred takes the preference → investor gets $50M back, common split the remaining $250M
• Exit at $800M → preferred converts → investor takes 12.5% = $100M

1x participating preferred — worse for you

Participating preferred gets the preference AND participates pro-rata in remaining proceeds.

Same example, $800M exit, $50M invested at 12.5%:

• Preferred takes $50M preference first
• Then preferred also takes 12.5% of remaining $750M = $93.75M
• Preferred total: $143.75M (vs. $100M non-participating)
• Common shareholders get less

Sometimes capped (participation stops after 3× return). Ask about this.

The preference stack

Each round's preferred typically sits on top of prior rounds' preferred. Later money paid first.

Company that raised:

• Seed: $3M
• Series A: $15M
• Series B: $50M
• Series C: $150M

Total preference stack: $218M. If the company sells for $200M, the Series C investor gets some/most of their money back, and everyone else (including you, common shareholder) gets zero.

The "2021 vintage" problem

Many companies raised at stretched valuations in 2020-2022. They now need to grow into those valuations or face down-rounds. If they exit below their peak preference stack, common is wiped. This is especially relevant when evaluating companies that last raised in that era.

9. How to evaluate a grant

Most offers present equity as a dollar figure: "$400k in equity over 4 years." This is almost always calculated as (shares granted × last preferred price) / 4. This number is usually misleadingly high. Here's how to translate it.

Questions to get real data

1. How many shares am I being granted? (Number of shares is the underlying reality.)
2. What is the strike price?
3. What is the current 409A FMV? (Not the preferred price; the common-stock valuation.)
4. What is the last preferred price and date of last round?
5. What is the post-money valuation of the last round?
6. What's the total preference stack to date?
7. How many total shares outstanding (fully diluted)? (Lets you calculate % ownership.)
8. What's the typical refresh cadence?
9. What's the post-termination exercise window?
10. What's the acceleration on change of control?

If the company won't answer #5-7, that's a yellow flag. Common-stock grants are genuine offers; information about them should not be secret.

The percentage framing

More useful than dollar amount: what percentage of the company am I getting?

Your shares / Fully diluted shares outstanding = your ownership %

Rough benchmarks for a Director/Sr-Manager-level non-executive hire:

Stage	Typical grant (% fully diluted)
Seed	0.25% – 1.0%
Series A	0.10% – 0.50%
Series B	0.05% – 0.25%
Series C	0.03% – 0.15%
Series D	0.02% – 0.10%
Pre-IPO	0.01% – 0.05%

Numbers rise sharply for VP+/C-level hires — VP of Finance at a Series B might be 0.3-0.8%, CFO 0.5-2%. Head of FP&A / Strategic Finance at Series C is often 0.10-0.25%.

The outcome distribution

Rather than a single "expected value" — model three scenarios:

• Zero case: company fails or exits below preference stack. Your equity worth $0. Probability depends on stage.
• Base case: company has a decent outcome — 2-4× valuation at exit. Your share is modest but meaningful.
• Home run: company has a 10×+ outcome. Your share is life-changing.

Rough probability estimates by stage (from startup failure data; directionally correct):

Stage	P(zero)	P(base)	P(home run)
Series A	~55%	~35%	~10%
Series B	~40%	~45%	~15%
Series C	~25%	~55%	~20%
Series D	~15%	~60%	~25%
Late/growth	~8%	~62%	~30%

These are rough; sector, founders, and market timing shift these significantly.

10. Public-company equity

Simpler, more liquid, and easier to evaluate than private-company equity. Trades some upside for a lot of clarity.

RSUs at public companies

• Granted as a number of shares, vesting over 4 years (sometimes 3).
• At vest: shares appear in brokerage, taxed as ordinary income (FMV × shares).
• Sell at market price anytime after vest.
• Value fluctuates with the stock. Can be up or down from grant date.

Evaluation: look at the number of shares, not the dollar value quoted. Stock can move 40% either direction in a year. The grant's dollar value on your offer letter is the grant-date price times shares; reality could be very different.

ESPP (Employee Stock Purchase Plan)

• Lets you buy company stock at a discount (usually 15%) from the lower of start-of-period or end-of-period price.
• "Section 423 plan" — qualified for favorable tax treatment.
• Max contribution: $25,000/year at most companies.
• Common recommendation: max it. The 15% discount alone is ~17% risk-free return if you sell immediately; the look-back feature can make it much higher.

Performance Stock Units (PSUs)

• RSUs that only vest if the company hits performance targets (revenue, stock price relative to peer index, etc.).
• Usually for senior roles (Director+).
• Can 0× or 2× based on performance multiplier.
• Higher-variance component of comp. Factor as 0.5× face value when comparing offers.

Blackout windows and 10b5-1 plans

• As an employee with material non-public information, you can only sell during open trading windows (typically a few weeks per quarter after earnings).
• 10b5-1 plans: pre-scheduled sale programs you set up in advance. Execute on auto-pilot regardless of what you know. Recommended for systematic diversification.

11. Negotiation: what's actually movable

Not everything in an offer is fixed. Knowing what's negotiable — and how — is leverage.

Most negotiable

• Base salary: usually ±10-15% wiggle, especially if you have a competing offer.
• Signing bonus: easier to move than base. Companies often have signing budget separate from salary budget.
• Equity grant size: especially at private companies; hiring managers sometimes get approval for larger grants.

Moderately negotiable

• Post-termination exercise window: extending from 90 days to 5-10 years is sometimes possible, especially for senior hires.
• Acceleration: double-trigger acceleration on change of control is a common ask for senior roles.
• Title / level: can sometimes be leveled up a notch, which affects refresh grants and trajectory.

Rarely movable

• Vesting schedule: almost always standard 4-year/1-year-cliff. Don't bother.
• Strike price: set by 409A. Non-negotiable.
• Equity type (ISO vs NSO): determined by plan document.

Leverage sources for you specifically

• Competing offer (if you have one). Biggest lever.
• The pension trade-off. You can quantify what you're walking away from (2% of highest-5 salary per year at retirement age, vested amount × present-value discount). Use it to justify a higher base or larger grant. Something like: "Leaving my state role costs me approximately $X/year in retirement income; I need the grant sized to reflect that."
• Scarce skill combination. JD + $5.2B budget + AI systems thinking is a rare profile; don't undersell it.
• Timeline flexibility. You can start now or in 3 months — that flexibility has value for them.

12. Worked examples

Example 1 — Series B AI company, Strategic Finance Director

Offer:

• Base: $180,000
• Target bonus: 10% ($18,000)
• Equity: 30,000 ISOs, 4-year vest with 1-year cliff, $4 strike
• Signing: $20,000

Company context:

• Series B closed 6 months ago at $16/share preferred, $600M post-money valuation
• 409A FMV: $4 (so zero spread at grant — common today)
• Preference stack: $90M ($25M A + $65M B, 1× non-participating)
• Fully diluted shares: 40M

Analysis:

• Your ownership: 30,000 / 40,000,000 = 0.075% — reasonable for a Series B director hire
• Cost to fully exercise: 30,000 × $4 = $120,000 (across years, if you choose to exercise)
• Paper value at grant (at preferred price): 30,000 × $16 = $480,000
• "Illustrative" year-1 value on offer letter: $480,000 / 4 = $120,000 (this is what they'll quote you)

Scenario outcomes (4 years from now, assuming full vest):

Scenario	Exit valuation	Common price	Your gross	Exercise cost	Net pre-tax
Fail	$0	$0	$0	$0	$0
Down exit	$400M	~$5	$150,000	$120,000	$30,000
Base case	$2B	~$45	$1,350,000	$120,000	$1,230,000
Home run	$10B	~$230	$6,900,000	$120,000	$6,780,000

With QSBS held 5+ years: federal tax on gains can drop to near zero (up to $10M). WA has no state income tax. So "net pre-tax" is close to "net in pocket" for the first $10M of gains.

Expected value (rough, probabilistic):
(0.40 × 0) + (0.25 × $30k) + (0.25 × $1.23M) + (0.10 × $6.78M) ≈ $995,000
Amortized over 4 years: ~$250k/year in expected equity value.

Example 2 — Series C fintech, Head of FP&A

Offer:

• Base: $210,000
• Target bonus: 15% ($31,500)
• Equity: 12,000 ISOs, $12 strike, 4-year vest
• Signing: $30,000

Context:

• Series C at $30/share preferred, $2B post-money
• 409A FMV: $12
• Preference stack: $250M
• Fully diluted: 65M shares

Analysis:

• Ownership: 12,000 / 65,000,000 = 0.018% — low side for Head of FP&A
• Exercise cost: 12,000 × $12 = $144,000
• Paper value at preferred: 12,000 × $30 = $360,000

Lower probability of zero (Series C), but lower upside multiplier. Cash comp ($241k total) is strong regardless. This offer is more about cash, with equity as upside insurance.

Scenario	Probability	Exit val	Net pre-tax
Fail / wipe	~15%	< $250M	$0
Base	~55%	$4B (2×)	~$480k
Home run	~20%	$15B+	~$2M+

Example 3 — Growing public SaaS, Sr. Director Strategic Finance

Offer:

• Base: $230,000
• Target bonus: 20% ($46,000)
• RSUs: $450,000 over 4 years (granted at $150/share = 3,000 shares)
• ESPP: 15% discount, $25k/year max
• Signing: $50,000

Year-1 comp realized: $230k + $46k + (~750 RSUs × $150 = $112,500) + ESPP benefit ($3,750) = ~$392,000

Total 4-year comp if stock flat: ~$1.34M. If stock 2×: ~$1.57M. If stock halves: ~$1.12M.

Bands are much tighter than private equity. No home-run scenarios; no zero scenarios. You know roughly what you'll make within ±30% of the central estimate.

Example 4 — The failure mode

You take the Series B offer. Work 2 years. Vest 15,000 options. Have unexercised options. Company runs into trouble, executes a down-round at $4 preferred / $1 common. You lose your job in a RIF.

• Your 15,000 vested options: strike $4, current common value ~$1. Underwater. Not worth exercising.
• 90-day exercise window expires. Options gone.
• Your 15,000 unvested: forfeited on termination.
• Net equity outcome: zero.
• Your cash comp for 2 years: $180k + $18k = $198k × 2 = $396k. Still above your current state job, but you paid in career risk, pension opportunity cost, and household stress.

This isn't a "rare" outcome. This is what happens to roughly 40% of Series B hires, looking at aggregate data. Plan for the possibility.

13. What this means for you

Rules of thumb for your evaluation

1. Cash comp must stand on its own. Equity is a lottery ticket. If the base doesn't cover your life, don't count on the equity to bridge it. Floor: $160-180k base.
2. Exercise windows matter for mobility. If a company has a 90-day post-termination window, factor in the cash you'd need to exercise if you leave. This constrains your career options.
3. Stage trade-off: Series B has highest upside but highest zero risk. Series C/D trades upside for higher probability of some outcome. Public trades upside for certainty.
4. The 5-year QSBS hold is a real consideration. If you join a qualifying C-corp, exercise early (low spread = low AMT), and hold for 5 years, the federal tax savings can be massive. Plan for the hold.
5. Preference stack is a bright-line check. If a company's preference stack is >60% of last valuation, common is more at risk in a down exit. High-flying 2021 vintages are especially exposed.
6. RSU bird in the hand ≥ 2 option birds in the bush for your situation — you're cash-flow-sensitive over the next 2 years. Public-company RSUs are real comp. Private-company options may be worth zero.

Implication for lane selection

Don't pre-narrow. But the equity analysis suggests the optimal frontier for you is probably:

• Fast-growing recent IPO / mid-cap public — strong cash, RSUs with real upside, no exercise trap. Trades some upside for certainty you need.
• Series C AI company with strong fundamentals and clean preference stack — meaningful equity, lower zero probability than Series B, still meaningful upside.
• Series B only if the specific opportunity is exceptional — company you have conviction in, sensible preference stack, extended exercise window, refresh culture.

This is a working hypothesis to test against the other research topics, not a conclusion.

14. Questions to ask in every offer conversation

Copy this list. Use it.

1. How many shares am I being granted? (Not dollar value — actual share count.)
2. What is the strike price? (For options.)
3. What is the current 409A FMV? (For options — tells me the zero-spread floor.)
4. What was the last preferred-round price and date?
5. What is the post-money valuation of the most recent round?
6. How many total shares are outstanding (fully diluted)?
7. What does the preference stack total across all rounds?
8. Are the preferred shares participating or non-participating? Any unusual multiples (1.5×, 2×)?
9. What is the post-termination exercise window? Can it be extended?
10. What are the acceleration provisions on change of control? Is double-trigger standard here?
11. What's the refresh grant cadence and typical sizing?
12. Does the company qualify for QSBS? (Most tech/bio C-corps do.)
13. Is this an ISO or NSO grant? If ISO, what's the $100k annual limit math on my grant?
14. Have there been any secondary/tender offers? Anticipated?
15. What's the company's stated path to liquidity? Expected timing?

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Draft v1 — open questions to address in next session: specifics on AMT triggers for your tax situation, worked QSBS example with WA residency, how to think about tender offers if they exist.

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